CSRC Consults on Enhanced Rules for Fund Managers

Source: Regulation Asia Lucy Zhang, Regulation Asia 2020-08-05

The changes are aimed at promoting the high-quality development of the public fund industry so that it can better serve the real economy.

The CSRC (China Securities Regulatory Commission) is soliciting public comments on new measures for public fund managers.

The current rules for securities investment fund management companies were set out in 2004, with a revision in 2012, forming the basic regulatory framework for the institutional entry, daily operation and personnel management of public fund industry.

In recent years, the industry has been confronted with profound changes in both internal and external environment of the market, the CSRC said, adding that the current measures are partly insufficient to adapt to the development and reform of capital market.

Given the need to adjust and revise the rules in due course, the CSRC has drafted new measures for fund managers after thorough investigation and research.

The rules seek to strengthen equity management of fund managers, raising the financial requirements for larger shareholders while also improving access for foreign shareholders and natural person shareholders.

Requirements for continuous supervision and reporting of equity shareholders are also enhanced, and the management of related transactions is strengthened, whereby fund managers may not provide financing to shareholders or their related parties.

The new rules also include incentive and constraint mechanisms aimed at improving corporate governance, culture and accountability at fund managers, including by incorporating compliance risk controls as a factor in evaluations and clarifying deferred remuneration for key positions.

The rules also allow high-quality fund managers to set up wholly-owned subsidiaries based on their business development needs to allow for differentiated development and increased specialisation.

The revisions also clarify the arrangements for the exit mechanism of fund managers, to build a more orderly industry ecosystem and prevent risk.

The consultation, available here, is open for comment until 30 August.

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investment

China Securities Regulatory Commission

CSRC Consults on Enhanced Rules for Fund Managers

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